Franke v. Greene

Filing 253

MEMORANDUM AND ORDER-- IT IS HEREBY ORDERED that Plaintiff William E. Franke's Motion for Attorneys' Fees (ECF No. 195 ) is GRANTED in part and DENIED in part. FURTHER ORDERED that Franke's Motion for Attorneys' Fees is GRANTED to the extent that the Court will order Greene to pay attorneys' fees in the amount of $10,380.00 to the law firm of Dowd Bennett, LLP, and in the amount of $17,506.00 to the law firm of McCarthy, Leonard & Kaemmerer, L.C. Franke's motion is DENIED in all other respects. Signed by District Judge Jean C. Hamilton on 09/11/2013. (CLK)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

WILLIAM E. FRANKE,
Plaintiff,
vs.
ROBERT P. GREENE,
Defendant/Counterclaim
Plaintiff
vs.
WILLIAM E. FRANKE,
Plaintiff/Counterclaim
Defendant,
and GANNON INTERNATIONAL, LTD.,
Counterclaim Defendant.

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Case No. 4:11CV1860 JCH

MEMORANDUM AND ORDER
This matter is before the Court on Plaintiff William E. Franke’s Motion for Attorneys’ Fees,
filed March 18, 2013. (ECF No. 195). The motion is fully briefed and ready for disposition.
BACKGROUND
Plaintiff William E. Franke (“Franke”) is the founder, President, Chief Executive Officer,
and owner of Gannon International, a Missouri corporation with a family of affiliated corporations,
partnerships, and joint ventures around the world. Defendant Robert P. Greene (“Greene”) was an
employee of Gannon International at its principal place of business in St. Louis County, until he
resigned from his position on March 2, 2010.
On or about May 4, 2007, Greene executed and delivered a promissory note in the original

principal amount of $750,000, in favor of Franke (the “Promissory Note”). Franke alleged as
follows with respect to the Promissory Note: (1) that pursuant to the Promissory Note, Franke
extended credit in the amount of $750,000 to Greene; (2) that over time, the amount owed under the
Promissory Note was partially paid down; (3) that subsequently, additional funds were extended by
Franke to Greene under the Promissory Note; and (4) that the Promissory Note thus was a revolving
note, which covered all monies borrowed from Franke by Greene, as Greene attempted to satisfy his
financial obligations.
Franke filed his original Complaint in this matter on October 26, 2011. In his Second
Amended Complaint, Franke sought payment on the principal and unpaid interest allegedly still
owed under the Promissory Note, in the amount of $531,524.66, plus attorneys’ fees. Franke further
asserted claims for breach of contract and unjust enrichment.
On September 24, 2012, Greene filed his Answer, Affirmative Defenses, and Counterclaims
to Franke’s Second Amended Complaint. Greene’s seventh affirmative defense stated as follows:
“In the event Plaintiff recovers on his claims herein, said recovery must be reduced in whole or in
part to account for amounts owed by Franke to Greene as alleged in the counterclaims below, and
in other litigation pending between the parties.” With respect to his counterclaims, Greene added
Gannon International as a Defendant, and alleged Franke and Gannon International breached both
a profit sharing contract and a consulting fee contract between the parties.1
This matter proceeded to a jury trial on March 4, 2013. The jury was instructed on Franke’s
breach of contract claim, for the original $750,000.00 loaned to Greene by Franke on May 4, 2007;
Franke’s breach of contract claim for the $70,000.00 loaned to Greene by Franke on July 30, 2008;

1

Greene also asserted claims for quantum meruit/unjust enrichment, tortious interference with
contract or business expectancy (against Franke only), and fraud in the inducement.
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Franke’s breach of contract claim for the $38,000.00 loaned to Greene by Franke on November 25,
2008; Franke’s breach of contract claim for the $38,000.00 loaned to Greene by Franke on January
1, 2009; Greene’s breach of profit sharing contract claim against Gannon International; Greene’s
breach of consulting fee contract claim against Gannon International; Greene’s quantum
meruit/unjust enrichment claim against Gannon International; Greene’s tortious interference with
contract or business expectancy claim against Franke, relating to profit sharing; and Greene’s
tortious interference with contract or business expectancy claim against Franke, relating to consulting
services. On March 8, 2013, the jury returned the following verdicts:
1)

In favor of Franke on Franke’s breach of contract claim for the original
$750,000.00 loaned to Greene by Franke on May 4, 2007, with damages set
at $357,253.00;

2)

In favor of Franke on Franke’s breach of contract claim for the $70,000.00
loaned to Greene by Franke on July 30, 2008, with damages set at
$84,528.00;

3)

In favor of Franke on Franke’s breach of contract claim for the $38,000.00
loaned to Greene by Franke on November 25, 2008, with damages set at
$45,032.00;

4)

In favor of Franke on Franke’s breach of contract claim for the $38,000.00
loaned to Greene by Franke on January 1, 2009, with damages set at
$44,762.00;

5)

In favor of Greene on Greene’s breach of profit sharing contract claim against
Gannon International, with damages set at $274,238.00;

6)

In favor of Greene on Greene’s breach of consulting fee contract claim
against Gannon International, with damages set at $12,900.00;

7)

In favor of Gannon International on Greene’s quantum meruit/unjust
enrichment claim against Gannon International, for the value of consulting
services furnished but not compensated;

8)

In favor of Franke on Greene’s tortious interference with contract or business
expectancy claim against Franke, relating to profit sharing; and

9)

In favor of Franke on Greene’s tortious interference with contract or business
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expectancy claim against Franke, relating to consulting services.
As noted above, Franke filed the instant Motion for Attorneys’ Fees on March 18, 2013.
(ECF No. 195). In his motion, Franke requests attorneys’ fees in the amount of $249,212.49 as to
the law firm of McCarthy, Leonard & Kaemmerer, L.C., and $10,407.50 as to the law firm of Dowd
Bennett, LLP. Greene objects both to the motion seeking attorneys’ fees in its entirety, and to
specific requests therein. (ECF No. 213).
DISCUSSION
I.

Was Franke Required To Submit The Issue Of Attorneys’ Fees To The Jury?
In his Memorandum in Opposition to Franke’s Motion for Attorneys’ Fees, Greene first

asserts the issue of Franke’s entitlement to attorneys’ fees was a legal one, triable to the jury.
(Defendant/Counterclaim Plaintiff Robert Greene’s Memorandum in Opposition to Motion for
Attorneys’ Fees (“Greene’s Opp.”), PP. 3-5). In reply, Franke maintains Greene waived any
complaint as to how Franke’s claim for attorneys’ fees was handled, as his counsel stipulated to the
Court that the issue would be addressed by the Court after the jury returned its verdicts. (Reply to
Greene’s Memorandum in Opposition to Plaintiff/Counterclaim Defendant William E. Franke’s
Motion for Attorneys’ Fees (“Franke’s Reply”), PP. 2-3). As support for his position, Franke
attaches an excerpted transcript of the trial proceedings, in which the following exchange took place:
THE COURT: Okay. Then anybody have motions?
MR. McGOVERN (Franke’s attorney): The last issue we would have, just wanted
to make sure we’re on the same page with this, in lieu of putting on anything with
attorneys’s fees now with the promissory note, we would wait to see what the verdict
would be. I told Andrew [Buchanan, Greene’s attorney] that we would then take that
up with the Court after that time.
THE COURT: That’s fine with me. Is it fine with you?
MR. BUCHANAN: That’s fine.

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(Franke’s Reply, attached Exh. 1, P. 3). Under these circumstances, the Court agrees that Greene
waived any right to insist that the issue of attorneys’ fees be presented to the jury.
II.

Did Franke Forfeit His Entitlement To Attorneys’ Fees By Instigating This Litigation?
Greene next asserts that Franke is not entitled to attorneys’ fees in this matter, because his

refusal to honor the profit sharing obligation to Greene was the cause of the litigation. (Greene’s
Opp., PP. 5-7). Upon consideration, the Court agrees with Franke that Greene’s alleged entitlement
to profit sharing was a separate claim against Gannon International, and thus in no way impacted
Franke’s right to pursue the instant litigation. This point is denied.
III.

Did Franke Overstate The Attorneys’ Fees Incurred In Connection With The
Promissory Note?
A.

2008 And 2009 Loans

Greene next asserts that Franke cannot recover attorneys’ fees for collection efforts in
connection with the $70,000, $38,000, and $38,000 loans from 2008 and 2009, because those loans
were not subject to the Promissory Note or the attorneys’ fees provision contained therein. (Greene’s
Opp., PP. 8-9). The Court’s review of the record, however, reveals evidence the jury concluded the
later loans were subject to the Promissory Note. Specifically, the Court notes that the jury awarded
7% interest on those amounts through July 17, 2011, even though that rate was specified nowhere
other than in the Promissory Note itself.2 Under these circumstances, the Court will not reduce
Franke’s claim for attorneys’ fees by amounts incurred in attempting to collect on the 2008 and 2009
loans.
B.

Profit Sharing And Consulting Fee Claims

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The Court recognizes the jury did not award the requested 10% default interest from July 18,
2011, through March 4, 2013, but concludes that because a number of grounds could explain the
discrepancy, this fact does not defeat Franke’s claim for attorneys’ fees with respect to the later
loans.
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Greene next asserts Franke cannot recover for attorneys’ fees he incurred in defending and
then losing Greene’s profit sharing and consulting fee claims, as those claims were not covered by
the Promissory Note. (Greene’s Opp., PP. 9-10). Greene cites to Harris v. Union Elec. Co., 766
S.W.2d 80, 89 (Mo. 1989), for the proposition that “[w]here the claim to attorneys’ fees is based
upon a contract, the court must adhere to the terms of the contract and may not go beyond it.” (Id.,
P. 10).
In response, Franke asserts he is not seeking attorneys’ fees based on the counterclaims
themselves; rather, Franke maintains he, “seeks these attorneys’ fees based on his success on his
promissory note claim as that success involved defeating the affirmative defenses raised by Greene
to his claim on the promissory note, one of which was that any recovery by Franke had to be reduced
in whole or in part by amounts claimed by Greene in his counterclaims.” (Franke’s Reply, P. 9).
Franke thus asserts that because the counterclaims were asserted as an affirmative defense against
Franke’s claim on the Promissory Note, “fees incurred in connection with these counterclaims are
inextricably intertwined with collection under the note.” (Id.).
Upon consideration, the Court rejects Franke’s assertion that the counterclaims were
“inextricably intertwined” with Franke’s claim on the Promissory Note, as it runs counter to the
position Franke took throughout this litigation. In other words, as noted by Greene, Franke
vigorously argued against offsetting the profit sharing obligation allegedly owed by Gannon
International to Greene from the loan obligations owed by Greene to Franke, on the ground that
Franke and Gannon International were different parties. The Court eventually adopted this position
as well, disallowing the presentation of evidence at trial on Greene’s theories of offset, alter ego, and

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piercing the corporate veil.3 Thus, at Franke’s request the Court treated Greene’s counterclaims as
entirely separate from Franke’s claim under the Promissory Note. As such, the claims are not subject
to the attorneys’ fees provision contained within the Promissory Note, and so those portions of
Franke’s Motion for Attorneys’ Fees relating to time spent on the counterclaims must be denied.4
IV.

Amount Of Attorneys’ Fees To Which Franke Is Entitled
“The starting point for determining a reasonable attorney fee is to multiply the number of

hours reasonably expended on the litigation by a reasonable hourly rate.” Copeland v. ABB, Inc.,
2006 WL 2356140 at *1 (W.D. Mo. Aug. 15, 2006), citing Hensley v. Eckerhart, 461 U.S. 424, 433
(1983). “This figure is often referred to as the ‘lodestar.’” Id. (citation omitted). Under Eighth
Circuit law, “[t]he onus is on the party seeking the award to provide evidence of the hours worked
and the rate claimed,” and “[t]he district court should exclude hours that were not reasonably
expended.” Wheeler v. Missouri Highway & Transp. Com’n, 348 F.3d 744, 754 (8th Cir. 2003),
citing Hensley, 461 U.S. at 433, 434, cert. denied, 541 U.S. 1043 (2004).
In his response, Greene does not dispute the reasonableness of the requested hourly rates.
As held above, however, the Court will exclude those time entries that relate to Franke’s defense of
Greene’s counterclaims, rather than his effort to enforce the terms of the Promissory Note.
Upon review of Franke’s submissions, the Court notes that the Affidavit of Brian E.
McGovern in Support of Franke’s Motion for Attorneys’ Fees is heavily redacted, rendering a

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The Court further denied Greene’s motion for leave to file second amended counterclaims,
incorporating more explicitly his theory of offset, and refused to submit to the jury Greene’s
proffered instructions relating to the issue of offset. (See ECF Nos. 184, 186, 189).
4

Greene’s seventh affirmative defense does not change the Court’s determination, as the Court
finds that rather than asserting an independent defense to Franke’s claims, this provision merely
incorporated Greene’s asserted counterclaims.
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meaningful determination of appropriate fees difficult, if not impossible.5 Furthermore, at times Mr.
McGovern failed to provide sufficient detail in his entries to permit the Court to ascertain whether
the time expended was devoted to enforcement of the Promissory Note. In those circumstances the
Court disallowed the entries, because the onus was on Franke to provide evidence of his entitlement
to fees. See Wheeler, 348 F.3d at 754. In accordance with the foregoing, the Court will grant
Franke’s Motion for Attorneys’ Fees in part, and award fees as follows:
To the law firm of Dowd Bennett, LLP:

$10,380.00

To the law firm of McCarthy, Leonard & Kaemmerer, L.C.:

$17,506.00

CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Plaintiff William E. Franke’s Motion for Attorneys’ Fees
(ECF No. 195) is GRANTED in part and DENIED in part.
IT IS FURTHER ORDERED that Franke’s Motion for Attorneys’ Fees is GRANTED to
the extent that the Court will order Greene to pay attorneys’ fees in the amount of $10,380.00 to the
law firm of Dowd Bennett, LLP, and in the amount of $17,506.00 to the law firm of McCarthy,
Leonard & Kaemmerer, L.C. Franke’s motion is DENIED in all other respects.

Dated this 11th day of September, 2013.

/s/Jean C. Hamilton
UNITED STATES DISTRICT JUDGE

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At no time did Franke ask the Court to engage in an in camera review of his attorneys’ time
records.
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